Employee Benefits

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Employee Benefits

(11) Employee Benefits

We sponsor a pretax savings and profit sharing plan (the “401(k) Plan”) qualified under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, eligible employees are able to contribute up to the maximum allowed under the law. We may, at our discretion, match 100% of employees’ contributions up to $2,000 per employee per calendar year. Our matching contributions to the 401(k) Plan were $1.4 million, $1.3 million, and $1.3 million respectively, for the years ended December 31, 2023, 2022 and 2021.

We also sponsor a defined benefit plan, the MFN Financial Corporation Pension Plan (the “Plan”). The Plan benefits were frozen on June 30, 2001.

The following tables represents a reconciliation of the change in the plan’s benefit obligations, fair value of plan assets, and funded status at December 31, 2023 and 2022:

	December 31,
	2023			2022
	(In thousands)
Change in Projected Benefit Obligation
Projected benefit obligation, beginning of year	$	15,952		$	22,280
Interest cost		753			579
Assumption changes		(3	)		(5,450	)
Actuarial (gain) loss		(271	)		85
Settlements		–			(716	)
Benefits paid		(954	)		(826	)
Projected benefit obligation, end of year	$	15,477		$	15,952
Change in Plan Assets
Fair value of plan assets, beginning of year	$	18,768		$	26,098
Return on assets		2,347			(5,702	)
Employer contribution		–			–
Expenses		(113	)		(86	)
Settlements		–			(716	)
Benefits paid		(954	)		(826	)
Fair value of plan assets, end of year	$	20,048		$	18,768
Funded Status at end of year	$	4,571		$	2,816

Additional Information

Weighted average assumptions used to determine benefit obligations and cost at December 31, 2023 and 2022 were as follows:

	December, 31
	2023		2022
Weighted average assumptions used to determine benefit obligations
Discount rate		4.68%		4.87%
Weighted average assumptions used to determine net periodic benefit cost
Discount rate		4.87%		2.65%
Expected return on plan assets		7.00%		7.25%

Our overall expected long-term rate of return on assets is 7.00% per annum as of December 31, 2023. The expected long-term rate of return is based on the weighted average of historical returns on individual asset categories, which are described in more detail below.

	December 31,
	2023			2022			2021
	(In thousands)
Amounts recognized on Consolidated Balance Sheet
Other assets	$	4,571		$	2,816		$	3,818
Other liabilities		–			–			–
Net amount recognized	$	4,571		$	2,816		$	3,818
Amounts recognized in accumulated other comprehensive loss consists of:
Net loss	$	4,130		$	5,716		$	3,794
Unrecognized transition asset		–			–			–
Net amount recognized	$	4,130		$	5,716		$	3,794
Components of net periodic benefit cost
Interest cost	$	753		$	579		$	553
Expected return on assets		(1,280	)		(1,860	)		(1,301	)
Amortization of transition asset		–			–			–
Amortization of net  loss		358			105			896
Net periodic benefit cost		(169	)		(1,176	)		148
Settlement (gain)/loss		–			256			(865	)
Total	$	(169	)	$	(920	)	$	(717	)
Benefit Obligation Recognized in Other Comprehensive Loss (Income)
Net loss (gain)	$	(1,755	)	$	1,003		$	(9,503	)
Prior service cost (credit)		–			–			–
Amortization of prior service cost		–			–			–
Net amount recognized in other comprehensive loss (income)	$	(1,755	)	$	1,003		$	(9,503	)

The estimated net gain that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2024 is $400,000.

The weighted average asset allocation of our pension benefits at December 31, 2023 and 2022 were as follows:

	December 31,
	2023		2022
Weighted Average Asset Allocation at Year-End
Asset Category
Equity securities		87%		87%
Debt securities		13%		13%
Cash and cash equivalents		0%		0%
Total		100%		100%

Our investment policies and strategies for the pension benefits plan utilize a target allocation of 75% equity securities and 25% fixed income securities (excluding Company stock). Our investment goals are to maximize returns subject to specific risk management policies. We address risk management and diversification by the use of a professional investment advisor and several sub-advisors which invest in domestic and international equity securities and domestic fixed income securities. Each sub-advisor focuses its investments within a specific sector of the equity or fixed income market. For the sub-advisors focused on the equity markets, the sectors are differentiated by the market capitalization, the relative valuation and the location of the underlying issuer. For the sub-advisors focused on the fixed income markets, the sectors are differentiated by the credit quality and the maturity of the underlying fixed income investment. The investments made by the sub-advisors are readily marketable and can be sold to fund benefit payment obligations as they become payable.

Cash Flows

Estimated Future Benefit Payments (In thousands)
2024	$	1,268
2025		1,185
2026		1,280
2027		1,201
2028		1,119
Years 2029 - 2033		5,917
Anticipated Contributions in 2024	$	–

The fair value of plan assets at December 31, 2023 and 2022, by asset category, is as follows:

	December 31, 2023
	Level 1 (1)		Level 2 (2)		Level 3 (3)		Total
Investment Name:	(in thousands)
Company Common Stock	$	8,308	$	–	$	–	$	8,308
Large Cap Value		–		2,121		–		2,121
Mid Cap Index		–		606		–		606
Small Cap Growth		–		604		–		604
Small Cap Value		–		596		–		596
Large Cap Blend		–		638		–		638
Growth		–		2,278		–		2,278
International Growth		–		2,330		–		2,330
Core Bond		–		1,763		–		1,763
High Yield		–		351		–		351
Inflation Protected Bond		–		437		–		437
Money Market		–		16		–		16
Total	$	8,308	$	11,740	$	–	$	20,048

	December 31, 2022
	Level 1 (1)		Level 2 (2)		Level 3 (3)		Total
Investment Name:	(in thousands)
Company Common Stock	$	7,848	$	–	$	–	$	7,848
Large Cap Value		–		2,037		–		2,037
Mid Cap Index		–		594		–		594
Small Cap Growth		–		546		–		546
Small Cap Value		–		588		–		588
Large Cap Blend		–		560		–		560
Growth		–		1,843		–		1,843
International Growth		–		2,251		–		2,251
Core Bond		–		1,658		–		1,658
High Yield		–		347		–		347
Inflation Protected Bond		–		433		–		433
Money Market		–		63		–		63
Total	$	7,848	$	10,920	$	–	$	18,768

________________________

(1) Company common stock is classified as level 1 and valued using quoted prices in active markets for identical assets.

(2) All other plan assets in stock, bond and money market funds are classified as level 2 and valued using significant observable inputs.

(3) There are no plan assets classified as level 3 in the fair value hierarchy as a result of having significant unobservable inputs.